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Family business concession

You may be eligible for a concession on duty when you transfer the property of your family business to certain family members.

Eligible family businesses

The concession is available for primary production and prescribed family businesses.
Primary production refers to the business of agriculture, pasturage or dairy farming.
A prescribed business involves any of the following:
  • excavating and earthmoving
  • picture framing
  • gunsmithing
  • locksmithing
  • manufacturing, processing and packaging
  • printing and publishing
  • boot and shoe repairing
  • retailing and wholesaling, whether or not it involves repairing or installing goods sold
  • upholstering
  • undertaking or funeral directing
  • any of the following
    • beauty salon or barber shop
    • bus service
    • cinema
    • crematorium
    • engineering workshop
    • laundry or laundrette
    • newsagency, travel agency or real estate agency
    • repair and service workshop
    • rental business
    • restaurant or café
    • service station
    • sports complex or gymnasium
    • warehouse or bulk storage complex
 The concession may apply to:
  • the transfer, or agreement for the transfer, of business property
  • partnership acquisitions, if the partnership is a family partnership that holds business property
  • trust acquisitions, if the trust is a family trust that holds business property
  • trust creations, if the trust is a family trust that holds business property.
Business property is:
  • land used primarily to carry on a primary production business or prescribed business
  • personal property used to carry on the business on the land.
If the business property includes residential land located next to the land used for the primary production business, the dutiable value of the residential land is treated as nil.

Requirements

You must meet the following requirements to qualify for the concession.
In this case, the transferor is the person giving the interest in the business, and the transferee is the person receiving the interest.
  • a defined relative of the transferee, if the business is primary production
  • an ancestor of the transferee, if the business is a prescribed business.
  • The transferee intends to carry on the business.
  • The transferee doesn’t acquire the business property as an agent or nominee of another person or as trustee, other than in limited cases.

Example 1

The owner of a dairy farming business in the Sunshine Coast hinterland wants to hand over the business to his niece and her husband, who will continue to operate the business.
 
The owner transfers the following property to his niece and her husband:
  • land used for dairy farming
  • an adjacent parcel of land on which the owner currently resides—this will become his niece and her husband’s residence
  • a herd of 200 Guernsey cows
  • plant, machinery and equipment used for dairy farming.
The concession will apply because the land and personal property (cows, plant, machinery and equipment) are used for dairy farming and the transferees are both a defined relative of the owner. The concession will also cover the adjacent residential land.

Example 2

The owners of a banana farming business in Innisfail want to hand over the business to their grandson when he turns 18 years old. The grandson, who is currently 16, has expressed a keen interest to continue the banana farming business when he turns 18.
The owners create a trust, with their grandson as the sole beneficiary. He will be entitled to the trust property when he turns 18.
The trust property comprises:
  • land used for banana farming (including the owners’ residence, which will become the grandson’s residence)
  • banana plants and crop
  • plant, machinery and equipment used for banana farming
  • an investment property in Cairns.
The concession will apply because the land (including the owners’ residence) and personal property (the banana plants and crop, and the plant, machinery and equipment) are primarily used for banana farming, and the grandson is a defined relative of the owners. 
However, transfer duty will be imposed on the value of the investment property because this property is not used for carrying on the banana farming business.

What you have to pay

From 12 October 2016, you don’t have to pay duty if all the property is used for the business of primary production.
For transactions dated before 12 October 2016, you don’t have to pay duty on the land and personal property used to carry on the business of primary production. Transfer duty is payable on any water allocations and other property included in the transaction.
Read the public ruling on the extension of the concession for dutiable transactions for family businesses of primary production (DA105.3) for more information.
If the business is a prescribed business, you need to apply the transfer duty rate to any purchase price (including liabilities being accepted) for the transaction. Where there is no purchase price, duty is payable on the business property if it's valued at more than $500,000. For example, if the business property is valued at $650,000, you pay duty on $150,000.
Read the transfer duty rates.

How to claim

If you used a written document, such as a deed of gift, you must lodge:
  • the original documents
  • a family business concession (Form D2.5)
  • an identity details annexure for each non-Australian transferor and transferee, when transferring real property (e.g. homes, apartments, business premises and vacant land)
  • a valuation of any water allocations included in the transfer (for transactions dated before 12 October 2016).
  • a covering letter outlining what documents you have lodged, a valuation amount (if known), your name and return address.
If you are transferring a prescribed business, you will need to include a valuation of the property.
If you didn’t make a written agreement or have a Form 1 Transfer, lodge a transfer duty statement (Form D2.3) with the above forms. We will then send you an assessment notice that outlines how much duty you need to pay.
Find out more about lodging documents for assessment and stamping.